Location:  Crook County, NE Wyoming; 32 Miles NE of Gillette

The Lance Projects are located on the North-East flank of the Powder River Basin in Wyoming. The original NuBeth Joint Venture between Nuclear Dynamics Inc, Bethlehem Steel Corporation and later Pacific Power and Hydro (NuBeth JV), discovered thirteen substantial zones of uranium mineralisation associated with an extensive system of roll fronts confirmed by drilling between 1970 and 1979.

As part of this exploration program, the NuBeth JV drilled more than 5,000 exploration and development holes, totaling in excess of 912,000 metres. A proprietary database of the historic drilling and pilot plant data was acquired by Peninsula in 2007, defining a relatively unknown uranium district of which Peninsula is now the dominant mineral rights holder.

Figure 1: Lance Projects Location

Definitive Feasibility Study and Expanded Economic Study

In December 2011 Peninsula completed the Ross Project Definitive Feasibility Study (DFS) and the Lance Projects Expanded Economic Study (EES) on three production units planned at Ross, Kendrick and Barber (refer Figure 2 below).

The key results of the DFS and EES are summarized below:

• The Ross DFS and the Lance EES confirmed the technical and economic viability of the Lance in-situ recovery (ISR) uranium projects
• Ross DFS NPV US$46 million
• Lance EES NPV US$207 million with an initial capital requirement of US$79 million including the capital cost of the Central Processing Plant (CPP)v
• Steady state total production cost of US$31.55 per pound U₃ O₈ including indirect taxes, royalties and ongoing well-field development (C1 cash costs of US$11.93 per pound)
• Planned steady state annual production rate of 2.19mlbs U₃ O₈ per annum from three production units within three years of start-up with initial mine plan based on 17.2mlbs recovered U₃ O₈

Figure 2: Lance Uranium Projects, Wyoming, USA.

DFS Results

The DFS was completed by Lyntek Inc. (Denver based engineers) on the June 2011 measured and indicated resources of 8.8mlbs U₃ O₈ at the Ross production unit only and established the operating costs, well-field parameters and development costs which in the EES are applied to all three production units being Ross, Kendrick and Barber.

The DFS was completed on the Ross production unit which will produce 750klbs U₃ O₈ per annum for a 10 year minimum life from the JORC-compliant measured and indicated resources contained within the original Ross project permit application and an area containing further measured and indicated resources that is an extension of the Ross permit area (see figure 2).

The DFS assumes a network of well units, each containing four injection wells, one extraction (production) well, gathering station and monitor wells. On a standalone basis, the Ross production unit has a NPV of US$46 million.

EES Results

The Lance projects have 312 line kilometres of identified roll fronts, 13 zones of drill-determined mineralisation and an exploration target of 95-150mlbs U₃ O₈ .

Rockbury Capital FZ LLC and the Company applied the parameters used in the DFS to the EES which includes a total 23.3mlbs of U₃ O₈ . This number assumes the conversion of a 12.1mlbs of the 30.1mlbs of inferred U₃ O₈ resources that are currently delineated at the Lance projects to indicated category or better.

The EES anticipates the expanded project including Ross, Kendrick and Barber production units feeding a Central Processing Plant (CPP ) with an expandable capacity of up to 3.0mlbs per annum. The CPP evaluation was included in the Lyntek Scope of Work and as such is to a DFS level of accuracy.

In the EES the first production unit will be at Ross with a capacity of 750klbs per annum and production ramping up over 3 years to 2.19mlbs per annum steady-state production with the inclusion of the Kendrick and Barber production units.

The EES was completed to demonstrate the potential of the broader Lance projects. Realisation of this potential will be dependent on continued exploration and permitting success. In the EES further production units are assumed to be permitted for development at Kendrick and Barber and to follow Ross into production at 12 month intervals feeding the CPP.

The economic evaluation of these production units conducted as part of the EES yield standalone NPVs of US$111 million at Ross, US$75 million at Kendrick and US$64 million at Barber. The expanded project producing 2.19mlbs per annum U₃ O₈ has an estimated NPV of US$207 million including all capital and operating costs associated with the CPP.

It should be noted that the EES is not to the same level of certainty as the DFS, however these estimates are based on the existing JORC compliant resources within the Lance projects and have had the operational, production and financial parameters generated by the DFS applied to them. The Company and its advisors consider this to be appropriate due to the homogeneity of the mineralisation and operating environment.

The Company is also continuing the drill program at Kendrick and Barber with the aim of upgrading a minimum 40% of the inferred resources into a measured or indicated category to provide the feedstock for the expanded project.

Uranium Sales Agreement

On 15 February 2011 Peninsula signed a long term sale agreement to supply 1,150,000 lbs of uranium oxide (U₃ O₈ ) from the Lance Projects.  During 2010 Peninsula had engaged key utility and end user groups with the aim of securing long term sale agreements, and after a detailed negotiation process Peninsula agreed to terms that secure the sale of U₃ O₈ from Lance at escalated fixed price, quantity and term. The weighted average contract pricing over the term of the contract is consistent with the average term price used in the PFS. The terms of the sale agreement will see Peninsula supply U₃ O₈ over a period of 7 years. Negotiations are continuing with other groups involved in the nuclear power industry. 

Permitting Status

The Company has submitted technical and environmental applications to the Wyoming Department of Environmental Quality (WDEQ) for the Permit to Mine and the Nuclear Regulatory Commission (NRC) for the Source Materials License. These submissions have been accepted as technical/environmental complete for review by both agencies. The quality of the submissions has provided the Company with the basis to submit amendments to bring on the further production units in a timely and efficient manner.

Following a recent review of the permitting strategy the Company is confident in finalising permitting. In addition all new project areas are being designed so they are contiguous with the Ross permit area and as such will be deemed to be amendments to the Ross Permit (once issued) rather than standalone applications. This strategy will significantly reduce the permitting process and timing going forward.

Deep Disposal Well (DDW) License

On 13 April 2011 Peninsula, through its wholly owned subsidiary Strata Energy Inc (Strata), received approval from the Wyoming DEQ (WDEQ) for the construction and testing of Underground Injection Control (UIC) Class 1 wells at the Lance Projects.

The UIC permit is the first of three main licenses the Company requires to be granted for it to commence mining operations at Lance, and a license that has caused delays for other developers in the region. This deep disposal well (DDW) license allows Strata to construct and test five such wells in the Ross Permit area. The DDWs will be used to inject low-level wastes into an isolated rock formation at a depth in excess of 8,000 feet below the surface. It is anticipated that these will meet the water management requirement of an ISR operation at Ross.

The issuance of the UIC permit follows a review by the WDEQ and United States Environmental Protection Agency (USEPA) as well as a public notification and comment period, and is the culmination of 30 months of detailed environmental, geological and hydrological data gathering and analysis by Strata.

The study and application was completed by Petrotek Engineering Corporation of Denver USA and was submitted to the WDEQ in July 2010.

Combined Source and Byproduct Material License

On 31 December 2010 Peninsula, through Strata, submitted its application to the United States Nuclear Regulatory Commission (NRC) for a Combined Source and 11e.(2) Byproduct Material License.

The application requested authorization to construct and operate an ISR facility at Peninsula's Ross ISR Project, located near Oshoto, in north-eastern Wyoming and was the first of two major regulatory submissions completed by Peninsula during December 2010 and January 2011.

The submission of the license application followed approximately 25 months of drilling, baseline testing, data analysis, resource modeling, process design, and public outreach and was prepared in accordance with relevant NRC regulations and guidance.

On 29 June 2011 Peninsula received formal acceptance by the NRC of its application for a Combined Source and 11e.(2) Byproduct Material License. The acceptance review was performed to confirm the completeness and technical adequacy of the application, which is now undergoing a formal, detailed technical and environmental review.

The NRC is continuing its technical and environmental review and has advised that request for further information will be issued to the Company in December 2011. The Company is well advanced in collating additional information that may be required (based on precedent). The NRC has also advised that it will complete the draft supplemental environmental impact statement (DSEIS) by no later than December 2012. 

Based on the quality of the applications submitted by the Company it is anticipated that the DSEIS will be released prior to the timeline indicated by the NRC.

Permit to Mine

On 13 January 2011 Peninsula completed its second major regulatory milestone with the submission of its application to the Land Quality Division of the Wyoming Department of Environmental Quality (WDEQ/LQD) for a permit to mine.

On 14 March 2011 the WDEQ/LQD deemed Strata's Permit to Mine applicav2tion complete and adequate for technical review.

Strata received and responded to detailed first round technical comments from the WDEQ/LQD in June 2011 and these responses are now being reviewed by the WDEQ/LQD.

The WDEQ has finalised its technical and environmental reviews and the Company has completed the submission on the request for further information.

In November 2011 the WDEQ has advised that subject to the Company lodging the appropriate restoration and reclamation bonds, and finalizing the acquisition of land for the CPP, the Permit to Mine will be issued for public comment.

The Permit to Mine application, along with the Combined Source and 11e.(2) Byproduct Material License application and the Deep Disposal Well license detailed above, are the three key regulatory permits required for the development and commencement of production at Peninsula's proposed Ross ISR project.

Air Quality Permit

On 27 July 2011 Peninsula announced that the Air Quality Division of the Wyoming Department of Environmental Quality (WDEQ/AQD) has deemed Strata's Ross ISR Project Application for an Air Quality Permit to be complete.  The WDEQ/AQD has now completed a technical review and approval

Current Lance Projects JORC Compliant Resources

Table1: Lance Projects Resource Estimate - June 2011

Total	Tonnes	Grade (ppm U3 O8 )	U3 O8 (lbs)
Measured	3,565,167	479	3,768,733
Indicated	7,834,767	433	7,481,037
Inferred	33,103,793	414	30,178,789
Total	44,503,727	422	41,428,559

 

Table 2: Lance Projects Resource Estimate - By Project

Ross	Tonnes	Grade (ppm U3 O8 )	U3 O8 (lbs)
Measured	2,928,865	483	3,121,688
Indicated	5,832,583	445	5,715,774
Inferred	109,000	500	120,000
Total	8,870,448	458	8,957,462
Kendrick	Tonnes	Grade (ppm U3 O8 )	U3 O8 (lbs)
Inferred	19,154,600	408	17,235,709
Total	19,154,600	408	17,235,709
Barber	Tonnes	Grade (ppm U3 O8 )	U3 O8 (lbs)
Measured	636,302	461	647,045
Indicated	2,002,184	400	1,765,263
Inferred	13,840,192	420	12,823,080
Total	16,478,678	419	15,235,388

  (The JORC resource is reported above a lower grade cut-off of 200ppm and a GT of 0.2).

The resource was calculated by applying a combined constraint of a grade thickness product (GT) of 0.2 contour and 200ppm U₃ O₈ . These lower cut offs are considered to be appropriate for both calculating and reporting of ISR resources at the Lance Projects.

The measured, indicated and inferred resources are located in confined aquifers, (which are a requirement for successful ISR mining) that have demonstrated positive ISR recovery test-work. Geological modeling of the extensive downhole geophysical data has accurately defined the impermeable shales and mudstones that form the confining seals to the mineralised aquifers.

The Lance project covers an area of over 120km within which there is a combined total of at least 312 line kilometres (194 miles), 13 zones of drill-determined mineralisation and an exploration target of 95-150mlbs U₃ O₈ .

Lance Projects - Exploration Potential

The Lance projects covers an area of over 120km within which there is a combined total of at least 305 line kilometres (190 miles) of known stacked roll fronts. Of this total, only a small percentage has been explored with over 90% of the drilling concentrated within the more advanced Ross and Barber areas. Based on the historic conversion rate from roll front length to a drill-defined resource the mineralised potential of the Lance Projects, which is in addition to the JORC-compliant resource, is assessed at between 95 and 145mlbs eU₃ O₈ .

Table 3: Lance Projects Exploration Potential

Exploration Areas	Tonnes (M)		Grade (ppm e U3 O8 )		e U3 O8 (mlbs)
Range	From	To	From	To	From	To
Total	117.7	134.7	360	500	95	145

 

Vanadium Resource

In early 2011 Peninsula completed a representative diamond drilling and core sampling program over the Ross Permit Area resource in order to obtain sufficient data to define a vanadium resource of 1.74Mlbs V₂ O₅ . Based on 90 chemical assays an average U₃ O₈ / V₂ O₅ ratio of 3:1 was used to define the V₂ O₅ resource.

Following further studies specific ratios were applied to different parts of the uranium resource as determined by their respective stratigraphic position and horizontal position within the redox system. The updated vanadium resource for the Ross Permit Area as at June 2011 is summarised in Table 4 below.

Table 4:  Vanadium Resource - June 2011

Ross Permit Area*	Tonnes	Grade  (ppm V2 O5 )	V2 O5 (lbs)
Measured	2,246,296	196	968,973
Indicated	3,051,466	196	1,316,296
Inferred	108,328	196	46,729
Total	5,406,090	196	2,331,998

 

Drilling Program and Resource Confidence

On-going drilling will both enhance the grade and definition of the existing drill-defined resources at the Ross and Barber production areas and continue to convert areas of mineralised potential into JORC-compliant resources. The positive results to date provide further confidence that mining will commence within the targeted time-frame with production continuing over an extended mine-life.

Figure 3: Lance Projects Drilling Program 2011, Wyoming, USA

Peninsula completed 621 development drill holes at Ross and Barber during the 2010/2011 year for a total of 422,665 feet (128.83km). During the year the drilling program at both Ross and Barber has consistently returned high grade, multiple stacked intersections of uranium mineralisation which expedited the delineation of further, and enhancement of existing, JORC-compliant resources.

Ongoing drilling is testing extensions of the known mineralised zones identified by the 3D geological model, enhancing the grade and definition of the existing drill-defined resources and continuing to convert areas of mineralised potential into JORC-compliant resources.

A summary of the drilling program for 2010/2011 is below:

Type	Rotary Mud		Core		Total
Area	No. Holes	Total Footage	No. Holes	Total Footage	Total No. Holes	Total Footage
Ross	574	384,910	14	7,815	588	392,725
Barber	33	29,940	-	-	33	29,940
Total	607	414,850	14	7,815	621	422,665

 

The table below shows the best 40 results (by GT) from the 2010/2011 drilling program. For further results please refer to the periodic market releases during the year which detail all drill results at the Lance Projects with GT > 0.2.The positive results to date provide confidence that mining will commence within targeted time-frames with production continuing over an extended mine life.

Table 5: Best 20 Drilling Results by GT - 2010/2011 Drilling Program at the Lance Projects

Hole ID	Easting	Northing	Total Depth (ft)	From (ft)	To (ft)	Interval (ft)	Grade (ppm)	GT	Peak Concentration Grade
RMR1531	4935919	500813	880	714.75	735.75	21	830	1.74	11.5' @ 1150ppm
RMR1415	4936692	501671	840	651.0	690.0	39	436	1.70	9.5' @ 890 ppm
RMR0903	502732.9	4935012.2	660.0	551.8	579.3	27.5	518	1.42	5'@ 2300ppm
RMR0744	503031.0	4935819.0	580.0	515.3	533.8	18.5	650	1.20	5' @ 1060ppm
RMR0753	503180.9	4935829.0	580.0	503.8	547.3	43.5	245	1.07	8' @ 500 ppm
RMR1610	500841	4935602	860	716.25	742.75	26.5	390	1.03	6.5' @ 540 ppm
RMR0889	501781.3	4937036.0	860.0	787.8	811.3	23.5	418	0.98	2.5'@ 1350ppm
RMRD0015	504024.0	4936795.0	470.0	434.3	451.3	17	570	0.97	3'@ 1130ppm
RMR1339	4938305	503403	600	431.75	455.25	23.5	390	0.92	2.5'@ 1110ppm
RMRD0016	503543.0	4935264.0	510.0	479.3	498.3	19	454	0.86	3'@ 1520ppm
RMR0880	501953.7	4936823.8	840.0	687.8	708.8	21	392	0.82	1'@ 1260ppm
RMR0859	501955.6	4936793.2		715.8	736.8	21	378	0.79	3.5'@ 810ppm
RMR0900	501782.8	4937073.2	860.0	777.8	795.3	17.5	440	0.77	6'@ 650ppm
RMR0819	501842.7	4936830.0	820.0	689.3	719.3	30	256	0.77	1.5'@ 570ppm
RMR0934	502706.0	4935083.9	660.0	570.3	583.8	13.5	567	0.77	3'@ 1380ppm
RMR1595	500749	4935785	860	711.75	732.25	20.5	371	0.76	2.5'@1750ppm
RMR0744	503031.0	4935819.0	580.0	539.8	553.3	13.5	500	0.68	3' @ 760ppm
RMR0827	501847.3	4936799.5	820.0	714.3	723.3	9	820	0.74	6' @ 1000ppm
RMR0875	501989.6	4936794.5		707.8	731.8	24	300	0.72	2.5'@ 690 ppm
RMR0734	503007.5	4935817.0	580.0	519.3	537.3	18	385	0.69	3.5' @ 1290 ppm
RMR0745	502981.3	4935744.0	580.0	532.3	545.8	13.5	490	0.66	7.5' @ 760ppm
RMR0683	503007.1	4935873.5	580.0	552.3	563.8	11.5	560	0.64	3' @ 1400 ppm
RMR0597	503988.5	4938057.0	520.0	451.3	458.3	7	910	0.64	2' @ 1590 ppm
RMR1086	503287.6	4934314.7	640.0	484.3	500.8	16.5	382	0.63	2.5'@ 820ppm
RMR0708	503358.3	4938275.0	600.0	425.8	447.3	21.5	292	0.63	14.5' @ 350 ppm
RMR1086	4934315	503288	640	484.25	500.75	16.5	382	0.63	2.5'@ 820ppm
RMR1270	4944022	501784	460	253.25	258.75	5.5	1080	0.60	3'@ 1780ppm
RMR1431	4936777	501678	840	680.25	687.25	7	820	0.57	6' @ 940 ppm
RMR1325	4939968	503847	580	423.75	431.25	7.5	650	0.49	2.5' @ 1120ppm
RMR1568	4935796	500787	840	703.25	713.75	10.5	460	0.48	2'@ 1000ppm
RMR1273	4939658	503797	600	498.25	505.25	7	630	0.44	4'@ 910ppm
RMR1265	4939486	503811	640	565.25	572.75	7.5	590	0.44	4'@ 930ppm
RMR1501	4936617	500983	960	865.25	876.25	11	390	0.43	3.5'@ 730ppm
RMR1290	4943747	502470	700	105.75	121.25	15.5	270	0.42	2.5'@ 590ppm
RMR1514	4935918	500794	880	714.25	731.25	17	240	0.41	2.5'@ 320ppm
RMR1040	4936302	502853	640	537.25	545.75	8.5	480	0.41	1'@ 1080ppm
RMR1028	4936174	502886	640	490.75	508.25	17.5	220	0.39	2'@ 650ppm
RMR1171	4914333	500860	840	367.75	377.25	9.5	411	0.39	0.5'@ 1130ppm
RMR1386	4944095	501908	460	160.75	174.25	13.5	260	0.35	6' @ 410 ppm
RMR1336	4944081	501866	460	182.25	184.75	12.5	280	0.35	1'@ 570ppm